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The Caribbean new airport experience

New facility: Antigua and Barbuda's VC Bird International Airport

My colleague, Minister Wayne Scott, wrote recently about the way the Combined Opposition changes its story as its objections to the airport plan are proved, one by one, to be false. I’d like to try to demonstrate how that works by showing that a recent Christopher Famous article, published in The Royal Gazette, was riddled with misinformation.

Mr Famous, a staunch supporter of the Combined Opposition, was trying to say that compared to Islands in the Caribbean which are also redeveloping their airports, Bermuda was paying too much. Among the examples he gave were airport developments in Antigua and St Maarten. Antigua was only paying $98 million for its airport, he said, and St Maarten only $117 million. The People’s Campaign used the same examples.

One part of the reason is that they were, in both those cases, quoting the cost of only a single phase of these airport development projects, and ignoring the cost of previous and subsequent phases. In so doing they were comparing apples to oranges.

But there are other reasons the cost is higher. In Bermuda, we are raising the site to protect against storm surge. The foundation structure requires pilings sunk to a depth of 107 feet. The cost of professional services, materials and labour in Bermuda is much higher than in the Caribbean. And there is a requirement here to build US Customs Preclearance facilities, which do not exist in the airports he cites in his article.

The $117 million figure he gave for the cost of the St Maarten airport was actually the cost of Phase II of their plan, which was completed in 2006. Phase I was completed in 2001, and the current Phase III is being developed with an additional $132 million in financing. If Phase III is completed on budget, the combined cost will be over $240 million, more than double the amount Mr Famous cited for Phase II works.

In Antigua, he said, VC Bird International cost only $98 million. That’s certainly the figure the authorities there use, but it doesn’t paint the whole picture.

Phase I of that country’s airport development plan was awarded in 2007 to a consortium consisting of a Brazilian construction company and the Antigua-Barbuda Investment Bank. In 2011, the Antigua Government was unable to meet a $28 million payment to the Brazilian company, which abandoned its work on the project. The investment bank collapsed, and the government’s default was certainly one reason for that collapse.

After the US opposed an IMF funding package for Antigua, perhaps because of Antigua’s poor record of repayment, the Antiguans got a $95 million loan from Credit Suisse, some of which is at 13 per cent interest, with a ten-year moratorium on the repayment of principal, secured by the imposition of a $37.50 per person tax increase on both arrivals and departures, payable to Credit Suisse. Part of the Credit Suisse money — $50 million in total — had to be used to compensate the Brazilian company and local Antiguan investors.

The Antiguan Government has now had second thoughts about that loan, and is trying to renegotiate it. Their aviation minister, Robin Yearwood, recently told the Observer newspaper: “The loan that they (the United Progressive Party government) had signed for me — since I became the Minister — I don’t like it. I think reason will prevail. You can’t get no 13 per cent and 10 per cent interest in a world like this.”

Phase I of the work involved renovations and expansion of the existing terminal, and some work on the airfield. Phase II involved the building of a new terminal on land seized from jailed American financier Allen Stanford.

New loans had to be taken out to fund construction of the new terminal. They are said to have totalled between $75 million and $137.9 million. The Chinese became involved, completing the project in 2015 using all Chinese materials and all Chinese labour.

Financing also included Chinese government “grants” which in theory do not have to be repaid. However, the Antigua Government recently handed over another large parcel of prime beachfront real estate seized from Allen Stanford to a Chinese investment group, including the 455-acre Guiana Island and some smaller islands nearby.

The Chinese financing of the airport deal is complicated and not at all transparent, but you get the picture. The true cost of Antigua’s new airport is a very, very long way above $98 million.

Mr Famous didn’t mention the airport at St Vincent, which services fewer than 80,000 visitors a year. I bring it up because it is instructive in this context. Ground was broken for the new Argyll International Airport in 2008 supported by funding from Taiwan, Iran, Cuba and Venezuela, among others. It was due to open in 2011, but the St Vincent Government missed completion dates in that year, in 2012, 2013, 2014, 2015 and are thought likely to miss again in 2016. The cost, initially expected to be $240 million, after more than five years of delays, is currently estimated to be around $350 million!

Anybody who thinks the team at the Bermuda Ministry of Finance is going to allow this kind of shambolic situation to characterise our management of this new airport project is mistaken. Bermuda is serious about getting this done quickly, efficiently, intelligently, carefully and without wasting so much as a penny if we can help it.

We keenly feel our responsibility to get this done in a way that will make us all in Bermuda proud. In fact, it’s a strategic decision to have CCC as a government partner to guarantee the project will be delivered on time, on budget and on spec.

We have found a way of doing it that doesn’t add to Bermuda’s debt burden, freeing us from the necessity to squeeze the annual budget and increase the economic pain Bermudians are feeling. We have found a way of doing it that guarantees delivery on time and on budget — free of cost overruns. We have found a way of doing it that allows us to maximise the participation of Bermudians in the project, before, during and after construction.

And as we’ve all seen in the architects’ renderings, we’ve found a way of doing it that is going to give us an architecturally attractive, first-class, modern, efficient airport, one that will both project our first-class reputation and help us in our economic recovery.

It’s one of the great tragedies of our time that the Combined Opposition can’t see what is in front of their noses. They have wasted countless hours and boundless energy searching fruitlessly for some evidence of wrongdoing on the government’s part over the last two-and-a-half years. Just think what they might have accomplished if they’d put that time to helping Bermudians in their time of need.

•Senator Georgia Marshall, JP, is the Bermuda Government’s Senate spokeswoman for justice.